With the ever-increasing popularity of personal mobile devices, e.g., cell phones, smartphones, personal digital assistants (PDAs), personal music players, laptops, etc., ‘mobility’ has been the focus of many consumer products as well as services of wireless providers. For example, in the telecommunications industry, ‘mobility’ is at the forefront, as consumers are no longer restricted by location with regard to communications and computing needs. Rather, today, as technology advances, more and more consumers use portable devices in day-to-day activities, planning and entertainment.
With credit cards and debit cards the world has been moving to becoming cashless society. Consumers are relying predominantly on non-cash based payments: credit card, debit card, automated check processing, pre-paid cards, etc. As the whole society moves towards virtual payments, challenges and opportunities spring up.
As the wallet in consumers pockets moves from the physical to virtual, security surrounding the virtual wallet becomes critical. The payment-processing industry faces three main challenges based on the current market trends such as user identification, fraud, and interchange fee. User identification has been a perennial problem for the industry. For example, how does a store clerk know that the person presenting the card is the actual owner? This problem has become more severe in the eCommerce world as of late.
Fraud is one of the biggest threats to the payment processing industry. There are many forms of fraud that plague the payment industry, which can include the following: Hackers stealing identity of consumers; Stealing card information; Fictitious merchant charging gullible customers more money than the consumers owes for the products and services; or Credit card number generators targeting consumers.
Lastly, interchange fee that merchants pay to get a transaction processed continues to increase consistently. Typically, merchants pay anywhere from 1.5%+10 ¢ per transaction to 2.5%+20 ¢ per transaction. The actual fee can depend on the number of transactions a merchant sends, type of business the merchant does, etc. In light of the above, the payment-processing industry is looking for solutions that can help deal with one or all of the challenges, which can result in lowered cost of processing a transaction and increased customer satisfactions.